Indie Artists Have A Major Beef With YouTube

The terms of YouTube's new
paid music service are rubbing some independent music artists the
wrong way.Dado Ruvic /
Reuters

There’s a growing concern among independent music artists that
the major record labels and the Internet giants that favor them
are squeezing the smaller players out of the marketplace,
The New York Times’ Ben Sisario reports.

One of the bigger and more
recent issues surrounds YouTube’s upcoming paid music streaming
service, which will reportedly have a free version and a $10
premium version that’s ad-free and provides offline caching of
songs.

A YouTube representative confirmed to Business Insider that record
labels representing 95% of the music industry have already signed
up to join YouTube’s new service, but 5% of the industry has yet
to sign YouTube’s new contract because the artists reportedly
don’t agree with its terms. As a result, YouTube has decided to
effectively block any independent artists that don’t sign up for
its new service, The Financial Times reports.

One of the contract’s more controversial clauses says if a major
record label agrees to any royalty rate that’s lower than the
rates given to an independent label, Google can lower the
independent label’s rate accordingly, after a 30-day notice
(likely an email).

Furthermore, YouTube’s contract also requires an artist’s entire
catalogue be available for the company’s free and non-free
streaming services; artists can’t choose individual songs or
albums to withhold, or opt out at all.

A source close to YouTube told Business Insider the deal will not
affect regular users that post their own songs and videos on
their own channels, but it will affect musicians signed to
multiple record labels in multiple countries. So if Artist X from
the UK is signed to their friend's indie label in their home
country, but also signed to a major record label in the U.S.,
users will be able to watch the video in the U.S. but not the
UK.

And so, the indies are fighting back.

Darius Van Arman, co-founder of the Secretly Group that boasts
independent artists like Bon Iver, will speak in front of a House
Judiciary subcommittee on Wednesday in part of a larger hearing
on music licensing. Van Arman provided a statement to the subcommittee
before the hearing, which says, “the three major recording
companies have become proficient at extracting a disproportionate
share of copyright-related revenue from the marketplace.”

The indies also have a problem with how major record labels
compute “market share.” According to Van Arman, the big record
labels are overstating their share of the music market by
counting the records they own, but also the records they
distribute — which are actually owned by independent
artists. But since these big labels have large subsidiaries
that manage hundreds of indie artists, it remains a murky gray
area.

But here’s why this market share issue is important: Record
labels, be they big or independent, use market share as leverage
in licensing negotiations with digital services, like YouTube.
And since the big record labels have an “inflated share,”
according to the independent artists, they can demand higher
royalty rates, large advance payments and even minimum
guarantees. Indie artists, in their estimation, don’t get the
same opportunities to succeed in the online music sector.

Alison Wenham, CEO of the Worldwide Independent Network, an
umbrella group for small record labels, told The New York Times the online music
marketplace has become “a privilege affordable only by the
biggest and richest players.”

“In the growth of the Internet, what was to be a utopian leveling
of the playing field, a democratization for all, what is actually
happening is a form of cultural apartheid,” Wenham said.